EU & UK:PRICE WARS WITH THE OEM’S

[Anonymous]

Price wars with the oem’s
Price wars are pushing
retailers to move toward cheaper imports. Lee believes that the
onslaught of Chinese and Asian imports has considerably reduced the
quality of products to the end-user. “The Asian product isn’t of the
quality of the UK and the European manufacturer. The market has been
created because of the price. It’s like any industry. Because prices
have been driven down, the corporate needs to supply at such a low cost
to do those large contracts, so everybody now has to buy Asian
products. So it’s not good for UK and European manufacturers.” He fears
that the current climate is to linger and that “trade is losing its
quality desperately.”
The other major change that has happened over the past ten years is the
rapid growth FOR THE OEM’S, particularly toner cartridges.
THE OEM’S now represents 35 per cent of the average customer spend. The
problem with this, says Lee, is that THE OEM ARE highly competitive,
low margin product market and because it represents so much of the
average customer spend, traditional stationery products are in
reasonable decline.
He explained “THE OEM manufacturers like Hewlett-Packard and Canon all
want to keep this market which they never bothered with before. They
keep making their products more and more difficult to copy so that they
can control the market. OEM manufacturers control the market and they
make all the money.” Lee blames the dominance of the OEM manufacturers
for keeping resellers margins so thin.
Going forward, Lee hopes United will become something unique in the
marketplace. “We’re trying to be a bit more than a dealer group. We’re
trying to create a frontline company.” He wants members to trade under
the United banner as a single entity, much like UK removals group
Britannia, to give them “the opportunity to fight against the
corporates. The public is more likely to go to a well-known brand
because it thinks that it’s going to get a better deal, and it probably
will.”
Lee doesn’t believe that Challenge has put a dent in United’s strategy
in any way, shape or form. “We’ve got a two-tier strategy. We are
committed to dealers trading directly to the end-user as United. That
is our number one strategy. And to create high value for their
individual businesses is a major point of that strategy, as is creating
a national distribution network from it. The second tier is to make
sure that the smaller dealer gets better value for money and has a
marketing edge on his local competitors.”
He continues: “The main protagonists behind Challenge didn’t want to be
involved in our strategy and that’s probably the reason why they left.
There were a couple of dealers that wanted to move on with our strategy
but they have gone because the others did. But I’m not saying that they
won’t come back.”
So what if any of the members that left United to form Challenge want
to return? Easy, says Lee: “The door is always open – for some of them.

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September 29, 2005 at 11:20 AM